SAMSON MARITIME LTD, MUMBAI V. ASST CIT RG 7(2), MUMBAI

ITA 6160/MUM/2012

• Counselvise Citation: 616019914 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAKASH L PATADE
• Assessee Lawyers: RAJESH S ATHAVALE

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH. .. , ! , BEFORE S/SH.I.P.BANSAL, JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.6160/MUM/2012, ' ' ' ' # # # # / ASSESSMENT YEAR-2007-08 SAMSON MARITIME LTD. 7, MB. P.T. BUILDING, MALET BUNDER, MUMBAI-400009 VS ASST. CIT RANGE 7(2), 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN: AAACS9177M ( $% / APPELLANT) ( &'$% / RESPONDENT) '() '() '() '() * * * * / ASSESSEE BY : SHRI RAJESH S. ATHAVALE + * / REVENUE BY : SHRI PRAKASH L. PATADE ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 12-06-2014 -.# + ), / DATE OF PRONOUNCEMENT : 18-06-2014 ' ' ' ' , 1961 + ++ + 254 )1( )/) )/) )/) )/) 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DATED.15.07.2012 OF THE CIT(A )-13,MUMBAI, ASSESSEE HAS RAISED FOLLOWING GROUNDS APPEAL: BEING AGGRIEVED BY THE ORDER PASSED BY THE COMMISS IONER OF INCOME-TAX (APPEALS)13, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT(A)) YOUR APPE LLANT SUBMITS, AMONG OTHERS, THE FOLLOWING GROUND FOR YOUR SYMPATHETIC CONSIDERATION: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING PENALTY OF RS. 3,09,381/- UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. YOUR APPELLANT RESERVES THE RIGHT TO ADD TO, ALTER OR AMEND THE GROUND OF APPEAL. 2. THE ONLY GROUND OF APPEAL IS ABOUT CONFIRMATION OF PENALTY OF RS.3.09 LAKHS IMPOSED BY THE AO U/S.271(1)(C) OF THE ACT. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF SHARE O PERATIONS,FILED ITS RETURN OF INCOME ON 30. 10.2007 DECLARING TOTAL INCOME OF RS.2.48 CRORES.AS SESSING OFFICER (AO) FINALISED THE ASSESSME - NT ON 24.12.2009,DETERMINING THE INCOME OF THE ASSE SSEE AT RS. 2, 58, 28,029/-. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO FOU ND THAT ASSESSEE WAS EARNED INCOME FROM NON-TONNAGE BASIS,THAT IT HAD DEBITED AN AMOUNT OF RS. 9,37,519/- AS FOREIGN EXCHANGE LOSS FROM NON-TONNAGE INCOME. ON VERIFICATION,HE FIND THAT FO REX LOSS WAS ONLY FOR THE OPERATIONS CARRIED OUT IN RESPECT OF TONNAGE BASIS. HE HELD THAT ASSES SEE HAD WRONGLY CLAIMED THE EXPENDITURE INCURRED ON THE VESSELS IN THE TONNAGE SCHEME UNDER THE HEAD NON-TONNAGE SCHEME. HE DISALLOWED THE SAID AMOUNT AND ADDED IT TO THE TOTA L INCOME OF THE ASSESSEE.HE ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) FOR FILING INACC URATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME.HE DIRECTED THE ASSESSEE TO FILE REPLY AS TO WHY PENALTY U/S. 271(1)(C) OF THE ACT SHOULD NOT BE LEVIED. AFTER CONSIDERING THE LETTER OF THE ASSESSEE DATED 24.06.2010, HE HELD THAT ASSESSEE HAD DEBITED RS. 9.37 LAKHS AS FOREIGN EXCHANGE LOSS FROM NON-TONNAGE INCOME,THAT ON VERIFICATION IT WAS FOUND THAT FOREX LOSS WAS ONLY FOR THE OPERATIONS CARRIED OUT IN RESPECT OF TONNAGE VESSELS,THAT ASSESSEE HAD WRONGLY CLAIMED T HE EXPENDITURE INCURRED ON THE VESSEL UNDER THE TONNAGE SCHEME UNDER THE HEAD NON-TONNAGE INCOM E, THAT THE ASSESSEE ITSELF HAD ADMITTED 2 ITA NO. 6160/MUM/2012 SAMSON MARITIME LTD. THE MISTAKE COMMITTED BY IT,THAT THERE WERE NO TRAN SACTION IN FOREIGN CURRENCY IN NON-TONNAGE ACTIVITY,THAT ASSESSEE HAD APPORTIONED PART OF LOSS ON NON-TONNAGE INCOME, THAT THE ASSESSEE WAS WELL AWARE OF ITS INCOME OF OPERATIONS FROM NON-TON NAGE VESSEL AND INCOME FROM OPERATIONS OF TONNAGE VESSELS AND WHICH LOSS TO BE APPORTIONED FR OM WHICH INCOME, THAT EVEN THEN ASSESSEE HAD DEBITED AN AMOUNT OF RS. 9.37 LAKHS AS FOREX LO SS FROM NON-TONNAGE INCOME. REFERRING TO EXPLANATION 1 TO SECTION 271(1)(C) HE HELD THAT ASS ESSEE HAD CONCEALED THE PARTICULARS OF INCOME. FINALLY,HE IMPOSED THE PENALTY OF RS. 3,09,381/- U/ S. 271(1)(C) OF THE ACT. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORDER, HE HELD THAT AO HAD ISSUED NOTICE U/S 143(2) ON 07.08.2008,THAT ASSESSEE HAD FILED A LETTER BEFORE THE AO ON 25.09.2009, IN THAT LETTER IT STATED THAT FOREX LOSS ON TONNAGE VESSEL HAD BEEN WRONGLY CLAIM ED UNDER THE NON-TONNAGE INCOME, THAT ASSESSEE HAD REVISED THE RETURN FOR AY 2008-09 ON 2 7.01.2009.HE FURTHER HELD THAT ASSESSEE HAD FILED INACCURATE PARTICULARS TO EVADE TAXES,THAT EX PLANATION FURNISHED BY THE ASSESSEE WAS NOT SATISFACTORY,THAT THE AMOUNT IN QUESTION WAS TREATE D AS DEEMED CONCEALMENT.CONFIRMING THE ORDER OF THE AO,FAA DISMISSED THE APPEAL FILED BY THE ASS ESSEE-COMPANY. 5. BEFORE US,AR STATED THAT BECAUSE OF GENUINE AND INA DVERTENT MISTAKE, ASSESSEE HAD MADE CLAIM OF FOREX LOSS,THAT ADDITION MADE BY THE AO WAS NEVE R CONTESTED,THAT ASSESSEE HAD VOLUNTARILY OFFERED THE DISALLOWANCE,THAT EVERYTHING WAS DISCLO SED TO THE AO,THAT AFTER THE MISTAKE WAS NOTICED BY THE ASSESSEE RETURN FOR THE SUBSEQUENT Y EAR WAS REVISED,THAT ASSESSEE COULD NOT REVISE THE RETURN FOR THE YEAR UNDER APPEAL AS THE TIME LI MIT HAD LAPSED.HE RELIED UPON THE JUDGMENT DELIVERED BY THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATER HOUSE PVT. LTD. (348 ITR 306).HE ALSO REFERRED TO THE ORDER OF H BENCH OF IT AT,MUMBAI OF HARSHAD B.DESAI(ITA NO. 8031/ M/2010-AY 2005-06,DT.08.08.2012.)DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA AND STATED THAT THERE WAS NO VOLUNTARY C OMPLIANCE BY THE ASSESSEE, THAT AO HAD ALREADY ISSUED A NOTICE FOR MAKING ENQUIRY, THAT IT WAS ONLY AFTER THE NOTICE U/S.143(2) WAS ISSUED THAT THE ASSESSEE CAME FORWARD. HE RELIED UPON THE DECISION OF THE HONBLE APEX COURT DELIVERED IN THE CASE OF MAK DATA(358ITR593). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD CLAIMED FOREX LOSS ON TONNAGE VESSEL U NDER THE NON-TONNAGE INCOME AND SUCH CLAIM IS NOT ALLOWABLE.PROVISIONS OF THE ACT ARE VE RY CLEAR ABOUT THE LOSS THAT COULD BE CLAIMED OR NOT CLAIMED UNDER THE TONNAGE INCOME/NON TONNAGE IN COME.ASSESSE IS A CORPORATE ENTITY AND ASSISTED BY THE PROFESSIONALS.AFTER THE AO HAD ISSU ED NOTICE U/S.143(2)THAT THE ASSESSEE REVISED ITS COMPUTATION OF INCOME FOR SUBSEQUENT YEAR AND AGREE D FOR ADDITION FOR THE YEAR UNDER APPEAL.IN OUR OPINION,IT WAS NOT VOLUNTARY COMPLIANCE OF THE PROVISIONS OF THE ACT.IN OUR OPINION,AFTER RECEIVING NOTICES U/S.142/143 IF THE ASSESSEE ADMIT S SOME INCOME IT CANNOT BE TAKEN AS VOLUNTARY DISCLOSURE.SECONDLY, PENALTY UNDER THE ACT IS OF NO T OF CRIMINAL NATURE.BEFORE IMPOSING THE PENALTY,WHAT AO HAS TO DECIDE IS THE SUFFICIENCY OF THE EXPLANATION OFFERED BY THE ASSESSEE.IT IS THE EXPLANATION OF THE ASSESSEE THAT DECIDES THE VA LIDITY OR OTHERWISE OF THE PENALTY.IN THE CASE BEFORE US,AO AND FAA HAVE GIVEN A CLEAR FINDING THA T THE ASSESSEE NOT OFFERED ANY SATISFACTORY EXPLANATION ABOUT THE FOREX LOSS CLAIM. NOW,WE WOULD LIKE TO DISCUSS THE CASES RELIED UPON BY THE ASSESSEE.IN THE MATTER OF PRICE WATER HOUSE PVT. LTD. (SUPRA)IN THE STATEMENT IT WAS INDI CATED THAT THE PROVISION TOWARDS PAYMENT OF GRATUITY WAS NOT ALLOWABLE,BUT IT CLAIMED A DEDUCTI ON THEREON IN ITS RETURN OF INCOME.CONSIDERING THE PECULIAR AND SOMEWHAT UNIQUE FACTS OF THE C ASE,HONBLE SC HELD THAT THE TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIV OCALLY STATED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT,THAT IT INDICATED THAT THE ASSESSEE MADE A 3 ITA NO. 6160/MUM/2012 SAMSON MARITIME LTD. COMPUTATION ERROR IN ITS RETURN OF INCOME,THAT THE CONTENTS OF THE TAX AUDIT REPORT SUGGESTED THAT THERE WAS NO QUESTION OF THE ASSESSEE CONCEALING IT S INCOME OR OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS.IT WAS FURTHER HELD THAT THE AO HIMSELF HAD NOT NOTICED THE ERROR COMMITTED BY THE ASSESSEE. IN THESE CIRCUMSTANCES,HONBLE COU RT REACHED THE CONCLUSION THAT DUE TO A BONA FIDE AND INADVERTENT ERROR,THE ASSESSEE WHILE SUBMI TTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME.IN OUR OPINION,FACTS O F THE CASE UNDER CONSIDERATION ARE TOTALLY DIFFEREN T FROM THE FACTS OF PRICE WATER HOUSE PVT. LTD. (SUPR A).IN THAT MATTER ERROR HAD OCCURRED IN FILING THE RETURN AND NOT IN THE STATEMENT OR THE AUDIT RE PORT.SECONDLY,AO IN THE PRESENT CASE HAD FOUND THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT AN ALLO WABLE DEDUCTION.AS FAR MATTER OF HARSHAD B DESAI(SUPRA) IS CONCERNED IT IS FOUND THAT IN THAT MATTER PENALTY WAS DELETED CONSIDERING THE PECULIAR FACTS OF THAT MATTER.AS BOTH THE CASES,REL IED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS,SO,IN OUR OPINION SAME ARE OF NO HELP TO THE ASSESSEE. WE FIND THAT THE HONBLE SUPREME COURT HAS DELIBERA TED UPON THE ISSUE OF LEVY OF PENALTY U/S. 271(1)(C)OF THE ACT,IN THE CASE OF MAK DATA(SUPRA), AS UNDER: EXPLANATION 1 TO SECTION 271(1)(C) OF THE INCOME-T AX ACT, 1961, RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AS SESSING OFFICER, BETWEEN THE REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSE SSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS TO THE DEPARTMENT TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED INCOME AND NOT OTHERWISE. VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKE S A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAS TO BE ABSOLVED FROM PENALT Y. THE ASSESSING OFFICER SHOULD NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE SUCH AS 'VOLUNTARY DISCLOSURE', 'BUY PEACE', 'AVOID LITIGATION', 'AMICABLE SETTLEMENT', TO EXPLA IN AWAY ITS CONDUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FO R CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE ASSESSING OFFICER HAD RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED THE TRUE PARTICULARS OF INCOME AND WAS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTIO N 271 READ WITH SECTION 274 OF THE ACT. THERE WAS NO ILLEGALITY IN THE DEPARTMENT INITIATIN G PENALTY PROCEEDINGS. RESPECTFULLY,FOLLOWING THE ABOVE DECISION,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE-COMPANY. AS A RESULT,APP EAL FILED BY THE ASSESSEE STANDS DISMISSED. 1)2 '() + UK UKUK UK 3 + ) 45. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE,2014 . 0 + -.# 6 7' 18 TWU , 201 4 . + / 8 SD/- SD/- ( .. / I.P. BANSAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 7' /DATE: 18.06 . 2014. SK 0 0 0 0 + ++ + &)9 &)9 &)9 &)9 : 9#) : 9#) : 9#) : 9#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 4 ITA NO. 6160/MUM/2012 SAMSON MARITIME LTD. 3. THE CONCERNED CIT(A)/ ; < , 4. THE CONCERNED CIT / ; < 5. DR E BENCH, ITAT, MUMBAI / 9=/ &)' , . . . 6. GUARD FILE/ / 1 '9) '9) '9) '9) &) &)&) &) //TRUE COPY// 0' / BY ORDER, > / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI